Hello, welcome everybody to Bank of Georgia Group PLC's earnings call. Thank you all for joining. Today, we released and are presenting the group's consolidated financial results for the second quarter and the first half of twenty twenty-four. As always, I'm joined on this call by the Group CEO, Archil Gachechiladze. And we'll start, as always, again, with the presentation, and then we'll move on to the Q&A session. For your information, this call is being recorded, and with that, I'll hand over to Archil.
Good evening. Thank you for being on the call. We are seeing the numbers that are usual numbers, pretty high, which is surprising given the fact that we are at the last decade of August, which basically means that you should be on vacation. So I hope you did get a little bit of rest and vacation, and with that, let me dive into the numbers and quickly go through the numbers that we have, which are pretty decent, so we have return on equity of 28%, with cost income of 35.6%, which is in combination of Armeniab ank. On a standalone basis, we are just shy of 30% for the Georgian operation that is.
Profit, net profit, consolidated is 430 million, although ECL charge, which is related to the acquisition and this does not reflect the run rate. If you add that, you get 480 million lari, which is more or less what we are looking at in terms of the profitability. So based on that and pretty strong capital numbers, we, the board, recommended a dividend per share of 0.338, which is about GBP 0.95, but it will be determined, the exchange rate will be determined in September, and a buyback of GEL 73 million. With the current prices, should be around 500,000 shares.
So with that, let me have a quick review of the macro economies of two countries, Georgia and Armenia. The format is slightly changed because this is the first time that we are presenting on the income statement side, the consolidated company, so hence the macro as well. We are presenting both countries. Both countries are doing very well. In fact, Georgia has delivered 9.5% second quarter real growth, which is extraordinary.
And we've upgraded the expectation for 2024 to 7%, 5% for next year, which, as you can see, from 2021, which was slightly, but as a result of a lower base in 2020, but then 2022 was 11%, 7.5% last year, and expected 7% this year. Armenia, in a similar way, had very strong numbers as well. Second quarter, 6.4%. Real growth and expected for the full year is 6% and 5.3% next year. We have seen the inflation coming down.
As you can see, CPI, the latest number is 1.8% in Georgia and 1.4% in Armenia, and the financing rates have come down from 11%, down to 8% in the case of Georgia, and 7.75% in case of Armenia. So very similar trends in both geographies and very similar economies in many ways. As you can see, because of very strong economic growth in both countries, we have seen mid-teens and high teens wage inflation in nominal terms and in real terms, pretty high as well, in Georgia as well as in Armenia. This is relevant, as we discussed, the cost inflation what we have seen in this quarter.
So we see that as the inflation, CPI inflation comes down, also the wage inflation is coming down. Real still remains high in case of Georgia, of about 13%. Having said that, I think the trend is downwards, and we should see it coming down to high single digit or low double digit. In Armenia, it's already about 5.4%. Also, what we would like to present here in both cases, Armenia and Georgia, is the main source of external sector inflows and outflows, which trend-wise we are seeing very decent numbers.
This is not the full current account balance, but current account balance are usually published a little bit with delay, so we'll be presenting those in the appendices of the larger presentation. But in terms of to seeing how the exports as well as the net transfers and tourisms are doing, it's a good indication to present this. Also, something that has become bigger and bigger part over the last few years of the hard currency inflows is the services, and on the last page, as you can see, we have presented tourism there, but on this page, you can see that the other parts, especially transport and IT, have become bigger contributors overall to the economy.
IT, for example, in 2023, in case of Georgia, you can see that it's about $890 million of export revenues that are generated in Armenia is even more, although Armenia itself is about 20% smaller in terms of the population and the economy, but the IT is a larger part of the economy. As well as, when we see the other, also there, the education, especially the university education, is becoming a bigger part of the economy in Georgia as well as in Armenia. I think the trends here are decent and flat and increasing in some cases.
We have seen Armenian dram getting stronger by 4.1% from the beginning of the year, while lari has stabilized, so it devalued slightly in May as we had some demonstrations and some volatility in the currency, but it came back to 2.7 per $1. From the beginning of the year, it is flat, and as you can see, the real effective exchange rate over the last 10 years has been flattish to appreciating in case of Georgia, slightly more so in case of Armenia, although in both countries, we are seeing good inflows and currency appreciation, which is something that we have seen now, especially in July.
We have seen it strengthen it to two point sixty-eight, but then the National Bank started to buy it as well lately in end of July and beginning of August. So we are seeing good, good numbers in terms of the gross reserves and net reserves. The first quarter decrease, slight decrease, was a result of the repayment of some of the foreign debt as well as we bought some in the first quarter some hard currency to pay for the acquisition. As well as then in the second quarter National Bank intervened to support lari because of the volatility, but then it has started to buy back in July and August. In Armenia as well, we have pretty strong numbers.
From historical perspective, the gross as well as net reserves are pretty strong. On the fiscal side, and the government debt side, we see that Georgia is below 40%, Armenia is about 50%, and fiscal balance also in the case of Georgia is 2.5%, currently running at that rate, although it's we are ahead of the budget in terms of the revenue collection there. In Armenia, the fiscal balance is planned for slightly more in terms of the deficit because of very ambitious projects in the infrastructure, especially on the road side, which is very encouraging and very good for the country, medium to long term.
As you can see on the banking sector, the growth is pretty healthy around, in case of Georgia, 17.8% and 19% in case of Armenia. De-dollarization is at very good levels, down from mid-65%, and about 8-9 years ago, down to 45% and 33%. Armenia performing even better on this, and Georgia has stabilized at about 45%, and the quality of loans in the whole sector is pretty healthy in both cases. Here, we would like to underline that Georgia has a gap in terms of the long-term trend. If you long-term trend of banking assets to GDP, I think we would be at very healthy levels between 70 and 80.
We're at the 65 right now, so there's more to grow there, but in case of Armenia, it's even more so. As you can see, banking debt to GDP is 53, 12 points behind Georgia, which represents more potential for growth in Armenia. Now, a few things about the numbers, about the strategic direction, and then we'll go to the revenue and expenses and numbers, so we are developing our retail and our application for the legal entities. We have added three new languages to our retail app, which is Armenian, Azeri, and Turkish. Azeri and Turkish are obviously very close to each other. About 70% of words are similar, but still very different language.
So basically, we added these three languages because they are minorities in Georgia, which Armenian and Azeri specifically, which I think will enjoy our services even more in their own languages because some of them have difficulty in Georgian or English. So that should allow us to basically cover better some of the minorities in the country. In terms of the number of clients, our growth is still impressive, although our overall penetration in terms of the coverage of the population is still pretty good, but overall numbers are growing at 11.8%, as you can see. In terms of digital usage, it's growing by 20%, so 1.469 million users.
And in terms of daily users, it's more than 700,000, as you can see, and it's growing, so engagement is growing even more than the usage, and usage is growing overall better than the overall client numbers. On the legal side as well, we have seen 20% more users of our digital channels, be it the internet application for the legal entities or the mobile application. And in terms of the monthly active users, we have 26% growth, so that means the higher proportion of overall our clients are using our digital channels. We've seen more and more of our retail sales being done through digital channels.
As you know, some few years ago, we were looking at the ratio of transactions being done digitally. So now almost all transactions, I mean, 99.2% are done in non-branches, about 70% done in digital channels, about 28% done in ATMs and self-service channels, so that combined is 99.2%. So 0.8% are done in the branches, and that number is decreasing even further. But what we are concentrating on right now is selling more products digitally, and that number used to be in mid-teens a couple of years ago, as you can see, and we have achieved 57 in terms of retail, so that's increasing in a very healthy way.
And specifically in terms of loans, retail loans, about 80% of all sales are done fully digitally. Mortgages are predominantly still issued through branches, at least part of the process. In terms of the acquiring business, payments acquiring is a very strong franchise that we have, and the strong growth is continued there, with 35% increase in volumes, year on year, and quarter over quarter is 17%. There's some seasonality there, but 17%. So year on year is 35%.
Market share there is very strong, 56.8%, up by three percentage points year on year. On the issuing side, so that's number of people using our cards actively, so monthly active users of our card usage, in terms of number of people, not number of cards, is up by 18.7%. Also a very good increase. So in terms of the franchise strength and growth, very good numbers there. Something that makes me very happy is our NPS number.
So you remember five, six years ago, we started focusing on this, and have managed to increase it from the low of 27, in fact, six years ago, to 71, and 71 is a new historic high, which I would like to thank all Bank of Georgia staff for focusing on this religiously and basically increasing the quality and satisfaction of our clients to a point where, you know, it's 70%. 70% is very high showing for any universal bank. That may or may not be sustainable. We'll be happy between 60 and 70. So we don't aim to go above 100, but rather keep it at these levels.
I highlight that because at some point, cost-wise, it becomes too expensive to further grow it, but 60-70 is a very healthy level of showing for any universal bank. In Armenia, as you can see, the growth rates for individual clients are very good. The number of clients have grown by 13.4%, and digital users by 43%, and daily users by 55%. So here as well, you can see that 57% of customers are now active users of the mobile application, and there's plenty of upside here, and there's plenty of upside in overall the retail customers monthly active users of the services.
So we expect that a lot of growth will come here, but it will take time because there's more product development and more overall user experience improvements and other things that will be introduced over time, and the teams are working together, and this will take time, but I think there's plenty of upside here. Now, in terms of the numbers, the second quarter numbers include Amira Bank, and therefore, some of the growth numbers are basically very high. So I'll talk about the group, but I'll also talk about the Georgia operations so that you can see what like for like comparison as well, so it's not lost in the overall big numbers.
So the revenue is up by 42% year on year, but in terms of Georgian financial services, it's up by 4.8%. Now, here, what's important to say is that the interest is up by 14.8% from 382 to 438. So the core revenue, which is interest, is up, but also then some of the other fee and commission income numbers, which are core numbers, have grown significantly as well. So net fee and commission numbers are up by 37%, so 88 to 120. So you remember a few slides ago, I discussed the acquiring business and how the volumes were growing at 35% and so forth. That's the main driver.
Net effects revenue has come from 88-99, so that's about 12% growth. The only decrease that we see is in other income, which predominantly was based on the gain on the real estate sale that we had one year ago in the second quarter of 2023. If you excluded that, you would have 17% increase in the non-interest income, which is very strong. Although the non-interest income seems like 10% reduction and the overall revenue number is only 4.8%, the core components of it have grown in a very healthy manner. We are quite happy about it. In terms of consolidation, you can see the big numbers as well. I'm not gonna dwell on that.
In terms of expenses as well, those are also big numbers, with 88% and 53%. Here as well, although Georgian numbers have grown as well, with 20+% here, we would still, in terms of the cost income basis, we would still be shy of 30%, and in combination, we are at 35% here. So costs and containment of cost growth is one of the focus areas. We basically have experienced this situation where the business has grown significantly over the last three years, and we've done a little bit of a catch-up of building the infrastructure as well as the people and staffing to make sure that the services are delivered at a high quality.
So we've seen some staff growth, but also the staff wage inflation has been significant. Having said that, I think we are seeing the trending down as I explained in the macro section, and we should have we should be close. By the end of the year, we should be close to the long-term ratios, which should probably be high single digit or low double digits, so that should be in line with our business growth. In terms of the loan portfolio, growth was 64% again, and 56% here. But if you look at the Georgian side, was 23%, constant currency was 19.6%. So very strong growth. We are very happy with it. Quarterly growth was also good.
On the Armenian side, year-on-year, when you look at it, it was 36%, but in terms of the constant currency, it was 26.6%, so a very strong growth there as well. Plus, Armenian dram got stronger versus lari and dollar. So that caused the lari translating number to be even higher. So on the deposit side as well, we are seeing very strong growth in both geographies. So very good growth, partly reflecting strong growth in the economies, in both economies, but also leading franchises in both cases.
Net interest margin, 6.3% is almost flat, which in Georgian case, it was decreased slightly as a result of the Tier 1 $300 million that we raised in the beginning of the quarter, and we repaid the old one at the end of the quarter. So there was some negative carry, about ten basis points, which should help us in the third quarter and going forward. And then in Armenian case, it was slightly more, so it balanced it out at around 6.3%.
In terms of cost of risk, we had an ECL charge, which when you do the acquisition, those of you that have spent a lot of time understanding some of the complicated IFRS rules will know that, when you do the acquisition of financial institution, the fair value of the loan book is added as if you issued that loan fresh, although there are some charges of stage three loans already have deducted in the fair value. And then you apply the ECL to the whole portfolio, which in this case is about seventy-three basis points for all of the Armenian book, although we've not seen any deterioration there at all, or whatever was separate.
So basically, if we didn't have that ECL charge, our cost of risk would be 0.4%, although you are seeing the numbers at 1.1%, and half year would be similar as well here. The NPL coverage slightly reduced, but no major movement there either. And we disclose separately the two separately because consolidation is also affected by ECL, so I think it's makes more sense to look at it separately, at least the next few quarters, and then it somehow balances it out. So profit as well. We saw that it's up by 11% year-on-year.
But if you include the ECL charge that I've discussed quite a bit now, it would be 480, which is comfortably higher than the run rate of 450 that I mentioned on the previous call. So, you know, 28% return on equity, but if you added the ECL, you would be at 31. So 28 is pretty good number, but 31 is reflective of the more of the core of what we are looking at. So in both cases, both numbers are pretty good. So, the capital ratios are strong in Georgia and in Armenia as well, especially on core Tier 1.
And basically, as I mentioned, on the previous quarter result and during the acquisition, although Armeriab ank is highly profitable, we expect that profitability to be deployed to finance high growth in Armenia. And here as well, because we have higher ratios and buffers for the core Tier 1, you see that there's a capacity to add Tier 1 or other or Tier 2 instruments and further finance growth in Armenia. Georgia numbers are also very high, but given the elections and the volatility in the region, I think it's good to have high buffers. Liquidity is high, and we like it that way, and probably at some point close to the end of the year, we may look at slightly reducing it.
All of this basically means that dividend announcement was 3.38, which is 10% growth on last year and very comfortable for our numbers, and buyback of 73%. Again, this is for half year only, and then second half year, we'll do in spring of next year. You can see that the numbers over the last three and a half years have been reducing of shares outstanding. That's a result of our buybacks that we started three years ago as part of the capital repatriation. So the number of shares are decreasing. So I will stop here and open the floor for your questions.
If you'd like to ask questions, please use the Raise Hand feature in Zoom, as well as the Q&A chat if you prefer to type your questions, and we have the first question from Robert Sage.
Yes, hello. Congratulations on a great set of results. I've got two questions, actually. The first relates to lending growth, where you've shown some really very strong lending growth in the second quarter, I think, well, over 8%. And I appreciate some of that is due to very strong economy, some of it is due to currency appreciation. But I just wanted to ask two questions on that. One is, are you comfortable with this rate of growth? Just in terms from a credit perspective. And the second part of this question is: to what extent do you think we should expect to see this moderate in the second half of the year, if at all?
The second question I've got is looking at the segmental information, because looking at the Georgian performance, it seems as if retail banking has absolutely shut the lights out relative to the first half of last year. But the SME division, slightly lower profit, and corporate and investment banking, significantly lower profits, all of which balances out to a sort of good Georgian showing, obviously. But I was wondering if you could look and sort of see how you see the shape, the divisional shape of your PNL coming through over the second half of this year and into twenty twenty-five in Georgia.
Hi, Robert. So I'll start with the last one. So basically, on the retail division is a net lari borrower from our treasury. So as the lari gets less expensive, the profitability of retail increases, and the corporate is a net lari lender to the treasury. Treasury is like our treasury. So as the lari rates and the refinancing rate has come down significantly, as you can see, the corporate profitability decreases. So does that make sense? So it all washes out at the end, but you know, I wouldn't pay too much attention to it. So it doesn't reflect the fundamental strength of the franchise, one way or the other.
But it, you know, when the lari rates decrease, so corporate is a lender to retail, so we use corporate lari as a net-net. I mean, retail has its own funding as well, but then on balance, it lends dollars to the corporate and borrows lari. So as the lari rates come down, basically, retail has some consumer lending, which is short-term fixed, and it, its profitability increases and corporate decreases. Then so I hope that answers your question, and that's not a big deal, if you ask me. On the SME, it's reflective of the pretty strong competitive nature of the business, because all the small banks are in SME segment, so it's up and down slightly.
So we experienced slightly less growth there versus the other parts of the business. Then in terms of the first question, which is growth of around 20%, we are seeing very strong growth in the economies of both countries. Plus, in Armenia, I think we see more potential of growth in terms of the bank loans to GDP. It certainly, there's potential there as well. Do we see it moderating? I think it will be reflective of the economy and the overall sentiment of investment, and so far we've seen very, very strong performance there. Is it sustainable at 20% medium to long term? No. But is it sustainable closer to 15%?
Yes, with slightly more growth in Armenia, close to 20% and 10-12% in Georgia, so guidance of 15%, you know, that we upgraded from the last quarter, you may remember from 10%, is what we think for our business combined. In Georgia, slightly less. In Armenia, slightly more. Having said that, we are experiencing and seeing very, very good quality lending. So, we've, if anything, tightened up on the risk underwriting in certain sectors, but nevertheless, we are seeing very, very strong growth, so we are happy about that.
Thank you.
Thank you, Robert. The next question is from Stephen Birrell, from Cavendish.
Hi. Hi, you've highlighted the upside that exists in sort of retail banking in Armenia, as well as talk in today's release about cost efficiency being an area of focus in Armenia. I was just wondering, does Ameriab ank need significant investment for you to achieve your ambitions in retail banking? And could you talk a bit more about what we could expect from a cost efficiency perspective? Thank you.
There will be investments, but it's already reflected in the numbers that you are seeing. So, there will be some investment going there, but it's basically we're working with the management of Ameriabank and agreed on a number of directions where the focus will increase. We will see slight, obviously, as we invest, but I think the scale of the bank allows it, so to be done, so that it should not be a big deal.
I n terms of the what to expect there, we have some numbers that you are seeing slightly higher increase in terms of the costs there that are reflective of retention bonus, which is applicable for eighteen months after acquisition. So you'll see that for the next few quarters, but then it should disappear. As well as some of the investment in new capabilities that we are growing there, but it's already in the numbers, that's it.
Got it. Thank you.
Thank you, Steven. The next question is from Henrietta Seligman.
Hi there. I've got three questions. The first was just on the Georgian SME NPLs. It looks like they've gone up a bit, and there's a higher cost of risk there. Could you just talk through the reason for that, please? The second is just on the Ameria Bank cost structure. You just explained that there are some retention bonuses. I was also just wondering if there's anything that structurally makes the cost different to Georgia and how much it's a function of sort of growing the scale of the bank
and if there are other things that you can do to bring down the costs. And then the third was just on the credit loss charge that you took. Is that something that you expect could be written back in the future, or could you just talk about the treatment of it and whether there might be any sort of ongoing cost related to that, or there's something different in the provisioning between the two banks? Thank you.
Hi, Henrietta. So, just one sec. So, first one was Georgian NPL, which it not struck me that we had any.
Just for the SMEs.
So, there's nothing specific, no, not nothing big or problematic that's happening overall. Maybe part of SME, but it's not major in the overall numbers, so not much to comment there. Let me just see the NPL numbers. Yeah. Yes, so basically, I don't have much to say. Quality retail on the SME. Yes, it's a very slight increase of thirty basis points. So overall, yes, I... You know, it's, we are seeing slightly higher NPL in SME, but should I say it's normal? I mean, we've seen, from last year was three point two, and this year is three point three and a half. So, you know, we have some issues there, but nothing major.
We've not seen any major issues and not like there's a trend or any problematic situation there. In terms of Ameriabank costs, we think that this higher level of costs will remain for the next few quarters, reflective of some of the things that I've discussed, but should normalize sometime next year, from mid next year. And in terms of the forty-nine million charge that you described, so this will flow in over the as the portfolio refreshes and gets refinanced over the next two, three years. Yes, this will flow into the interest income over time.
Thank you. That's helpful. Could I just follow up on the second question, just on the costs? Where would you expect the ratio to sort of normalize in the future, and are there any other areas that you can sort of improve efficiency at that bank? Thank you.
So I think the key focus over the next year or two in Armenia will be building out the business, especially on the retail side. I would expect the cost-to-income ratio to be somewhere between 35% and 40%. In Georgia, it's below 30%. As the scale is probably doubled or so in Armenia, then we'll see that operating jaws really kicking in, positive operating jaws, and that ratio coming down, but it will take a few years, so I think our key focus will not be at chopping up the costs there, but rather making sure that the costs don't get out of hand, but at the same time, investing in the capabilities, especially on the retail side.
That makes sense. Thank you very much.
Thank you.
Thank you, Henrietta. We have two questions in the chat, one from Brad Virbisky. He's asking if the operating expenses of 338 million for the quarter is that a good run rate number to think about? That's the first question.
We have a business that's growing at 15-20%, so I don't know what run rate means. You know, we basically look at the year-on-year numbers, and we would like to see positive operating jaws. That obviously does not always work. Sometimes the revenue increases significantly, like we've seen over the last two years, and then you have to adjust the infrastructure as well as see the market reality so that the costs of labor costs are affecting that. But overall, I think whatever we're leading in terms of the cost income of 35% is we're very comfortable with it. So it'll be lower in Georgia, higher in Armenia, but I think that's pretty comfortable level. So we don't guide expenses separately, but we guide cost income of 35%.
The next question is from John Yang in the chat: "Can you please comment on the competitive landscape of digital banking and payments in Armenia?
Probably it's best that we cover it separately, but basically there, what you see is that smaller banks are focused on retail, and they're more active there than the larger ones, and I think large banks, especially Ameria Bank, which enjoys fantastic brand recognition and very good standing with the corporate and premium clients, has a fantastic opportunity of capitalizing on that, as well as on some of the synergies that it has vis-à-vis the retail, and basically offering such services.
The next question is online from Olga Naydenova. I'll let her speak now.
Hi, I'm Hi. Sorry for, sorry for the sound. I was just wondering if you could comment on the very low cost of risk that you charge for Georgia, how generally sustainable that is, and where do you see it for next few quarters? And one more, if you could provide some sensitivity of your of your net interest margin to to interest rates. I appreciate the the AT1 comment, but if we see further rate decline, what do we see in terms of margins? Thank you.
So the rate decline, basically, you know, it has a negative effect, but the big decline, in a lot of terms, has already happened. And in terms of the dollar, you know, we don't expect a major change, and when there's some change, it will be reflected, but over the next two, three years. So I think we mentioned previously that the margin stabilizing somewhere between 5.5% and 6% would be something that we expect, but this could take a few quarters. What was the first question again?
It was about sustainability of low-risk charges in Georgia.
The economy is doing phenomenally well, and the cost of risk is low. Although we expect something between around 1%, which is more normal through the cycle. So whenever the cycle hits, obviously it will be higher. But right now, if the economy is growing at this rates, three years and a fourth year now in a row, it's only natural to see low cost of risk, which we are seeing.
Thank you.
Thank you, Olga. The next question comes from Can Ozguzel from Franklin Templeton. Hi, Can. Can you hear us? We can't hear you. So we can't hear Can, and he muted himself. Meanwhile, we have one question in the Q&A chat. John Yang is asking another question on Armenia, whether, "Will a separate tech stack be used in Armenia, and when do you expect the tech side of Armenia to be on par with Bank of Georgia? In two or three years?
Probably sooner than that, but it's not a tech stack per se, but it's the technologies of offering and selling in the right way, and so forth, that we'll be seeing how to deploy and develop, as well as the capabilities itself of the internet bank there. But it will take more than twelve months and less than three years, so somewhere there. I'm sorry I cannot be more exact, because I don't know. We'll see as we go. But we know and we feel what needs to be done, so that's a good start, and it's mainly coming from the management of the bank. So they will be doing it, and we'll be helping.
The only, so another question in the Q&A chat: What drove the outperformance of Georgian GDP growth in the second quarter, and is it possible that it continues to outperform forecasts, or is lapping last year's second half very difficult?
Tourist numbers are good, and service export numbers seem to be very good. So overall sentiment, I think, is very good. Regardless of the volatility that we've seen on the political side, we've seen very, very good performance in the economy. Is there a chance that this will continue? Yes, so far so good. I mean, we are seeing it continue.
So we couldn't hear John, but he typed his questions. He has questions regarding Armenia. The first one is about loan growth. It looks like outperforming the market notably. And can you please comment on this high loan growth in, at Ameriabank? And the second question is regarding the fee growth. It was exceptionally good in the second quarter. Are there any one-offs?
In the fee growth, on the Georgian side, we didn't have any one-offs. So it's very good growth, and predominantly, as I said, is driven by the acquiring business, volume growth, which was 35%. So very good growth, and we are seeing those volumes grow solidly, so I think it's a fantastic franchise that we have. On the Armenian side, also, fee growth was good. There was one advisory mandate of around 10 million GEL that came in, but Ameriabank has a very strong advisory in SME banking franchise in Armenia, and they are very good at it. So I wouldn't call it one-off. They've seen it quarter after quarter deliver those kind of fees.
The other question, if you wanna comment on the high loan growth in our at Ameriabank, but I think you already covered that broadly.
It's 26%, so it's slightly higher than what we expected of around 20%, but it's coming from strong growth at the end of the year as well, so far so good, and quite frankly, previously, I think the previous owner was dividending out some of the net earnings, and the fact that we have the ability of deploying it as long as the profitability remains high, so if we deploy that, the earnings at high profitability of around 25%, we are very happy with it, so that's what we have seen, that the management has used this capital because, you know, they can afford it now to deploy this capital and grow more than 20%, which we welcome and very happy about.
I don't see any other questions, Archil, at this point.
Well, thank you very much. It's been a pleasure, and I think we're very happy about the second quarter numbers. Especially the core revenue numbers growth, and the economy is doing very well. Our core franchise is doing very well in terms of the NPS number, record number in terms of the number of retail clients in both geographies growing at double digit. Digital users growing more than 20% in both geographies. Our payments retail franchise is doing very well. So overall net fee and commission income is growing very strongly in both geographies. Net fees growing at 12%. So all in all, I think the loan growth about 20% and higher. Deposit growth, similar. So overall, very good economy, very good growth.
We'll be focused on the expense side, and we see downward trends there in terms of growth numbers, as well as being ready for the upcoming elections in October. You've seen a lot of noise in May, but the noise has basically gone away. Everybody's focused on elections in October. We are keeping high liquidity. By the end of the year, we'll probably look at normalizing the liquidity, and focus on the profitability. So, with... You know, if you normalize for ECL, you will be looking at 31% return on equity, which would be, we think is very decent for any universal bank, as well as the franchise strength of NPS and the retail numbers.
We look forward to continuing delivering good numbers for you, and we will be back in November. Thank you very much.
Thank you all for joining, and take care. Bye.